After markets sent Bitcoin (BTC-USD) from a high of around $46,000 following the exchange-traded fund approval, the dip below $40,000 is equally stunning.
BlackRock (BLK) is the leader after achieving an ETF market milestone. It amassed $2 billion in managed assets last Friday. Initially, when the ETF price declined, retailers looked like they overpaid for Bitcoin at a peak price. But after prices recovered quickly by adding $2,000 between Jan. 25 to Jan. 26, the inflow to BTC ETFs should continue.
Expect the ETF market for Bitcoin to get increasingly crowded. Not all ETF launches will succeed. BlackRock has the best chance of attracting assets. This increases its ETF’s liquidity and is the preferred choice for retail investors.
Investors who are unhappy about holding their domestic currency or fiat alternatives like gold will buy the Bitcoin ETF. They will likely start with a small position, increasing the allocation as prices improve. Any sudden drop in BTC prices again would have the opposite effect. Plunging BTC prices creates panic and fear, so retail investors are not likely to average down.
Bitcoin and cryptocurrency markets are notoriously volatile. Their wild swings sometimes take many months to several years to play out. Eventually, they reverse.
Bitcoin is in the uptrend phase. The impact of Bitcoin ETFs is a positive catalyst that is still playing out.
